News

London & Munich

A Perfect Storm? – The Future of Retail in EMEA

2010-10-06T05:00:00Z

Jones Lang LaSalle releases the final chapter of the Retail 2020 report

London & Expo Real, Munich, 4th October 2010– Jones Lang LaSalle has issued today the final chapter of its Retail 2020 study; 'A Perfect Storm?' Retail 2020, which was launched in May via a bespoke interactive website, examines the rapidly changing global retail landscape over the next ten years.

‘A Perfect Storm?’ analyses the changes outlined throughout Retail 2020 that are likely to affect the retail sector over the next decade within the global macro-economic context. It considers the impact of a rising cost base set against low GDP growth, increased operational charges and persistent structural problems such as: unemployment, private and public debt, the return of the pensions crisis, and ecological and energy issues.

Robert Bonwell, CEO of EMEA Retail at Jones Lang LaSalle, said: “The Perfect Storm? demonstrates how conditions will certainly be different as we progress through the next decade. Retailers and shopping centre owners will be required to increase investment in new technologies, new markets and in understanding consumers in order to be a winner in the growing pressurised economic and retailing environment. Many of the solutions have been discussed before but now it requires a higher level of debate and greater partnership between retailer and landlord.”

Key findings of Retail 2020 which A Perfect Storm? include:

The changing face of the consumer - The consumer profile is changing: the baby boomers are retiring; the number of young adults is falling dramatically and more men than ever before are engaged in the whole ‘retail experience’. Consumers are more demanding than they have ever been and are gradually seizing power away from retailers and manufacturers, while the Internet and associated technologies continue to liberate consumer spending power.

The Internet - Online shopping will be key going forward and internet sales could account for 20% of total retail sales by 2020, doubling existing levels. Over the next decade the online retail landscape will dramatically change, with barriers to entry radically reducing and convenience to consumers increasing. Whilst many store-based retailers are already embracing the power of online shopping, few have launched entire new businesses and business models on the internet. Mobile internet will be a true impetus for change, and could provoke price deflation or even stimulate an end to fixed pricing altogether.

Retail Experience – Over the next decade there will be a growing need for retailers to provide sensational customer experiences and in-store services. Success in retail will be captured by retailers and shopping locations that help consumers savour time, and which offer a retail experience that is actually a lifestyle experience, offering shoppers an escape from daily stresses in relaxed surroundings. The barriers against change are weakening and the next decade will be one where space expansion will be lower but innovation will be higher, such as alternative delivery mechanisms from drive-thrus to local centralised pick-up points, for example petrol stations, dry cleaners and purpose-built facilities.

China and the East – The move by both Western European owners and occupiers towards the relatively underdeveloped and rapidly growing consumer markets in the East will continue over the next decade. The increasing saturation of retail space in Western Europe provides a strong incentive for retailers and investors to expand into Eastern markets, particularly India and China which have unconsolidated local retail markets but growing consumer populations.

Going Green – Environmentally sustainable measures will become even more crucial in new builds and running costs by 2020, and consumers will expect retailers to adopt strong green policies. While some investments will lead to lower operational costs, real returns will be long-term which could impact on short-term cash flows.

Guy Grainger, Head of Retail Agency in England at Jones Lang LaSalle concluded: “The backdrop to the entire Retail 2020 report is the change in retailing we will experience over the next ten years due to technological advancement and changes in consumer behaviour. The recession has left its mark, both in consumers’ psychologies and on the retail landscape. However, there will be winners from the present difficult set of colliding circumstances and the continuing Retail 2020 debate is all about how to be successful in the future.”

Retail 2020 follows on from the Retail Futures, 2010 report, published ten years ago by Jones Lang LaSalle, which successfully predicted many of the forces which shaped the consumer and retail landscape between 2000 and 2010.

Retail 2020 explores the shape of retail to come, covering dimensions such as sectors, locations, formats, offers and geographies, as well as profitability (growth, costs and business models), and was initially launched on 28th May 2010. The aim of Retail 2020 is to provide a pertinent assumption base around the future of European retail.

Jones Lang LaSalle and the Retail 2020 web portal intends to lead the conversation for the retail industry as a whole on the future of the sector and the implications this has for the real estate sector, but also offer blogs, videos, news, interactive polls and client profiles.